Why We Don't Enter Trades Using Fibonacci Retracement Levels in the Duomo Method
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- เผยแพร่เมื่อ 22 ก.ย. 2024
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Our approach to Fibonacci tools is quite unique. In this video we discuss why we don't trade the retracements and how other people who DO trade them are increasing their level of uncertainty with their trade opportunities.
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There's a mistake in the video as I drew the Fibonacci range the wrong way round (sorry guys - it's tricky talking and demonstrating things!). Since a Fibonacci range is showing how much the price has retraced back into the range, it should be the opposite to how I did it. However, the way we use our retracement levels to 'confirm' the range (as explained in this video), it doesn't matter which way round the range is drawn technically, since the numbers don't matter too much to us and the levels are equidistant anyway.
However, it is still a mistake and I just wanted to clarify that - sorry!
i kinda disagree. in your 1st drawing, if you label that 1st HH as X and measure the XA projection and find that point B was at 1.618 you can then anticipate that point C will retrace down to 0.618..
This channel is on fire. Congrats Nicholas, real priceless lessons lately!!
Thanks Nuno!
You did not draw your fibonacci level right. You put the 61.8 level above the 38.2 when you drew your Fibonacci line from the bottom to the top, this is completely wrong.
Since we are only using 61.8, 50 and 38.2 the levels are a mirror image, so it doesn't matter which way around we draw it. Technically you are correct, but for us it doesn't make any difference which way round it goes.
Since you are publicly teaching visitors to your page who may not be too familiar with Fibonacci, it is important you get the ratios the correct way around. You are attempting to teach a technical subject, so to avoid any confusion you should get your ratios in the correct order at the very least.
Looking at it either way can definitely work. My charting platform draws fibo levels backwards from how I naturally grasp the concept off each most recent completed leg. Pedantically insisting that 61.8 or 38.2 goes first or last really doesn't matter, at this level. Your videos are great. Really appreciate the points you made about cognitive and confirmation bias about ascribing significance to any price level -- I've seen a couple write-ups referring to the same or similar studies. Can't confirm it until price has broken the level or been rejected, but once it's done so, the trade's gone by -- you hit the nail on the head (still useful on a higher timeframe, then drilling down to trade a lower timeframe, of course). I just trade price reversals at any self-proven significant level now b/c of my experience w this, and I don't worry about particular harmonics or fibos overly much. HHHLs and LHLLs are my main go-to for finding levels, but that's flexible too.
The Duomo Initiative - Financial Education You can't be serious! Someone already said it: you're drawing it wrong period ... retracement means how far the price has deviated from an original move in that direction ... If you draw the fib the way you show it, of course it won't work and it doesn't make sense!
Pawel, I think you are missing the point a bit. The levels from each direction are equidistant, so claiming it will or won't work depending on which direction you draw it from is wrong.
What I am saying in the video is not that Fibonacci doesn't work. We believe it does work, it's one of the tools we use, however we believe the way most people use it is simply inaccurate. Instead, we use the Fibonacci retracements as a confirmation of the correct range, which makes the extension levels tradeable.
Yes, I drew the Fibonacci the wrong way (bad habit of mine) but as the levels are a mirror image, it makes no difference. Other than what someone rightly said above, which is that I am teaching the levels and should therefore have been more careful about what I am showing.
Actually in the drawing, retracement from top starts with 0.382, 0.50 and 0.618. But you were marking otherwise right?
Would it be considered double confirmation in terms of a trade setup if you've got an unconfirmed baseline trend line & a type 1/2 close on a C level that falls on that trend line confirming the baseline trend line (assuming your negative filters aren't screaming don't trade it)
It would not be a double confirmation as the uncertainty is too high when trading the retracements. The only exception would be the 50% in certain situations.
- Harley
This video may well be your best explanation of this subject to date😊. Superb. ✔
Cheers John, practice makes perfect!
Already a subscriber and 'like' this video. May I add the word proper practice makes perfect?
Why don't you look for candle patterns to determine an entry at the c level.. ? Let's say you hold a position for few weeks or months.. you will be waiting for the d level for so long...
This is the best trade strategy theory channel that I've found, period. Thanks for debunking that one for everyone. Great video
I was always thinking about that, fibonacci can really confuse you and we want to convince that the charts act as the lines
Thanks that's very clear. What if you have a confirmed significant level and when you draw your fibonacci the 61.8 or 50.0 falls exactly on the level and you get a type 1 close on the level? Does that not make the probability that much higher or should you only wait for a type 1 or 2 close on the 1.272 or 1.618 ext. to enter a trade. Sorry if this question sounds like rambling i'm just really trying to understand fibo the Duomo method.
It increases the probability since there is often confluence between confirmed significant levels. However, I wouldn't use this as confirmation of any sort, it would just potentially allow me to increase my position size (filling up the bucket a bit more, if you saw the video last week?) based on a trade from the existing confirmed significant level.
Risk Percentages to increase. Thanks got it.
Great content Nicholas. I'd like to ask you -what is your opinion on pivot points, and do you personally like or not?______thanks
wait for confirmation candle! excellent video. thank you.
Hi nick so are we looking at point D to trade from the points 1.618 and 1.272. If that is correct are we looking at reversals or breakouts at these levels.
As with all our significant levels we're looking for failure at the level, whether that is as a reversal or a breakout and retest. Since the movement towards the extension level is a breakout of the existing range, you will get the better profit potential in most cases from a reversal at the extension levels.
This came out in perfect time. I'm almost done with the course and I was needing a review with the Fibonacci. Thank you. I am really enjoying the whiteboard lessons.
I read your mind! How's your progress recently? Looking forward to seeing some of your charts now you've got through more of the course.
I will post on the board soon since now I do not have such a crazy work schedule anymore. I can finally put more effort in the participation.
can someone tell me what the type 1 / 2 close means?
th-cam.com/video/y5S67NnP0Mo/w-d-xo.html
I appreciate the video sir. Have been watching quite a lot of videos of Duomo by now. It inspires me to continue trading in the correct way hopefully. One question about FIB is Do you think it is a self fullfilling theory?
There are aspects that are self-fulfilling (look up theory of reflexivity by George Soros). However, there are also fundamental patterns in the market that are similar to other theories we see in physics, based around the first principles of fibonacci.
Don't normally comment but just wanted to say was a good video! Really insightful way to use Fibonacci retracements..
You're one of my favourite traders along with Trader Dante
Cheers buddy!
sounds complicated .. what course are you selling ??
I've been plotting fib for 2 days now, and only rarely seen that it bounce on those 3 levels. I also learned that candle sticks plays a big factor on the fib, a line may not do a retracement on an upward trend if a engulfing candle is present it may go down pass beyond zero. 😅😭😂😭
One of your best videos Nic. Thanks for that.
Cheers Asif, much appreciated.
While the tests show that on a large scale there is not any significant retracement on these levels what makes you think that you can make it useful by filtering out the uncertainty? I wonder if you have an answer for that.
Glad to see someone else gives importance to data! :) the retracements are only useful for confirmation and not for trading. Most studies on retracements show no predictive power for above market returns. We don’t use them for predictions, we use them after the retracement has already occurred and confirms an interaction was made at that level. We don’t trade the retracement level.
The Duomo Initiative - Financial Education But you “predict” that the market will go to the extension level if the range is confirmed . Is there any research done that shows market has tendency to go the extension of a confirmed range ?
No we don’t predict that. We don’t use the retracements for predicting anything, only for confirming the range is likely to be the correct one
The Duomo Initiative - Financial Education Then you use the range for extension, So -0.27 and -0.618 are kinda predictions.
Thank you for another insightful video! For clarification, is it an absolute requirement for type one and type two closes on the A, B, and C levels or rather that we look for type one and type two closes on the A and B levels and treat the C level as a zone?
Also, is there any value to basing additional "minor" fib retracements upon significant levels identified by confirmation of our A, B, and C levels?
We always need a type 1 or 2 close on a C level to confirm it. If it's a zone, you lose all your precision and therefore increase the uncertainty of any potential trades.
Just because a range doesn't have a type 1 or 2 close on a C level, that doesn't mean it's not the correct range - it just means we haven't been able to confirm it and therefore would rather exclude it from our trading, to avoid the uncertainty.
Sorry I don't quite follow your 2nd question and want to make sure I fully understand what you're asking before I answer. Can you explain again?
Awesome, thank you! As for my other question, once we have confirmed our A, B, and C levels can we consider those levels to be somewhat fixed for the pair for future analysis? If so, can we use those levels to draw out other Fibonacci retracements?
The Duomo Initiative - Learn to Trade
We also have big matchup this weekend! I got Joshua within the first 7 rounds😎👍
Not necessarily. It will often work that way simply because of the way fibonacci calculations work, that you will often find confluence. However, it's better to start from scratch each time.
As for the boxing - what a fight it was!
easys solution: use fib extension. point A will retrace to 382 (buy) on the bull; point B will inevitably drop between the 1272 and 1618 (sell).
my advice is sound with a 70% correct outcome, it is therefore imperative to use other tools such as Macd, rsa, and ema to up percentages to 90% give or take... and always use structural support and resistance, when coupled with butterfly cipher you can't lose.
note on fib ext: the bull is traced bottom to top, the bear top to bottom.
The Fib retracement + EW rocks!
Whats EW? :D
ohh i have been doing it wrong the whole time haha, ill try using what you teach next time i trade. Thank you for the great information! :)
There are more ways of doing things like this, but this is just my belief and based on the testing and trading we have done over the years.
It does make lots of sense what you are teaching us
I wish you were my mentor. 😫
Bit I want to talk about boxing... Jk
Great video, great point. Very relevant to a new trader.
haha I am always happy to talk about boxing!
The Duomo Initiative - Learn to Trade I know what we can talk about. I have replayed a video or two of yours to zone out and go to sleep to. Important videos that I have learned from. Even tho I was picking up what you were laying down the first time, just solidified certain relevant topics that you covered or engrained them more so. That's how dedicated I am. 🤑Well twice I have done so. 😁 My wife woke up and said Wtf are you doing, just because you fell asleep in school, doesn't meant you have to do it all over again. Haha funnier for me perhaps. I was synonymous for falling asleep in class throughout my childhood, five minutes in sometimes. I did my last year of college fighting cancer, I was awake 10% of the time, I tried anything and everything to stay awake. I was very ill and slept 20hours a day. But hey, I beat it and now sleep 3 hours a night. Haha one day the scale will level. my teachers were cool with it in college, my two final exams i got 97% 96%. Teachers were astonished, they were prepared to help me study the week prior. When I said I will be OK, they just figured I didn't care anymore as I was running out of time. Lesson here is to never give up, and sometimes people hear and understand a lot more than we think they do while zoned out or sleeping. I have almost an eidetic memory, even while sleeping. I guess what I am trying to say is, thank you for your dedication. It inspires me. Even tho I am very new to trading and your chanel, I feel I have taken away as much as I can from you. One day I hope I can afford the program, I have started saving for it. My goal is to start the program by June. I will be there.
I never expected one of my favourite comments to be one about someone falling asleep to my videos 😂 I think regardless of how much or how little your sleep, the important thing is what you do when you're awake. It's also important to understand what style of learning you work best with - schools and colleges aren't great with that (although I hear they're getting better). This 'one size fits all' approach just doesn't work for some people. You nailed your exams and did it your own way, despite the tough time you had been through!
I don't understand C at all but I know how A and B work
Is there something I can help clarify for you?
idk... I LOVE Fibonacci
Oopps, forgot to write the word -them- 😒.
nice
For one.. how are you not going to show fib on down trends as well. For two.. C point is not always at 50%.. and you said somewhere around 12-13 mins that you can not confirm the fib if C level is not near 50%.. I don't believe that's correct.
See.. even on your next video, you're agreeing that C level is correct, but it's not at 50% i.imgur.com/BeHcwJr.png
We do Fibonacci analysis on downtrends too, it's exactly the same as the uptrend but just in reverse. The C point doesn't have to be at 50%, it can be anywhere. However, we use a C point reversing at one of the retracement levels 61.8, 38.2 or 50.0 to confirm the range if it's a type 1 or type 2 close. Please keep in mind, this is related to our method of trading, I'm not saying ALL trading with Fibonacci has to be done like this.